For mortgage industry operators and prospective home-owners in Nigeria, anxiety and expectations are high, as the Central Bank of Nigeria (CBN) will in a few weeks to come (in June) announce the names of the primary mortgage banks (PMBs) that have scaled the recapitalisation hurdle.
For the operators, expectation is even higher, as the new Nigerian Mortgage Refinance Company (NMRC) will in the same month, commence refinancing mortgages to be originated by the successful PMBs, leading to more liquidity and a robust mortgage industry in the country.
BusinessDay had exclusively reported that out of about 83 PMBs, only 40 were able to meet the minimum recapitalisation conditions handed down by the CBN as at December 31, 2013 deadline.
Of this number, seven met the N5 billion capital requirement to operate as national mortgage banks, while 33 qualified for operation at the state level, having met the N2.5 billion expected capital to function in that capacity.
Corroborating this report in a telephone interview with our correspondent recently, Femi Johnson, president of the Mortgage Banking Association of Nigeria (MBAN) disclosed that the CBN had already written to the 40 successful PMBs, adding that about eight others have had to downscale, to operate as micro finance banks.
Our earlier report quotes CBN sources as saying that the recapitalisation exercise had gone on successfully, pointing out that what seemed a little delay in announcing the successful PMBs was deliberate, to allow a couple of PMBs which have real estate development subsidiaries, to divest from those subsidiaries, so that the announcement would be seamless and final.
The first quarter of this year witnessed what analysts described as a revolution in Nigeria’s mortgage industry, as the period saw the coming on stream of the Federal Government mid-wifed but private sector-led NMRC and the pace-setting Lagos State Homeownership Mortgage Scheme (LagosHOMS) on January 16, and February 3 respectively.
These were preceded a month earlier by the completion of the recapitalisation of the PMBs that has produced 33 PMBs which would operate at the state level, and seven others that would operate at the national level with N2.5 billion and N5 billion minimum capital base respectively.
“The anxiety on the June deadline is not misplaced because we have antecedents in this country; the Federal Mortgage Bank of Nigeria (FMBN) has operated for decades in this country, along with the National Housing Fund (NHF) without any impact on homeownership or housing delivery”, Oluyemi Madamidola, a mortgage expert, told BusinessDay in Lagos.
Continuing, he said, “as a country, we are not in lack of good ideas; what we lack instead is the will to implement the ideas. The launching of the NMRC and the recapitalisation of the PMBs happening almost the same time, is a brilliant idea, but how this plays out to our benefit is another kettle of fish”.
The high expectation among prospective homeowners is premised on the assurance by the Federal Government that NMRC would pull down lending rates for housing from the current spread of 20 to 23 percent to the low double digits or, at least, to a high single digit.
Ngozi Okonjo Iweala, the minister of finance, said at the launching of the company in Abuja that “this company is being set up to help lower the funding cost of mortgages and promote affordability and availability of good housing to working Nigerians by providing mortgage lending banks increased access to liquidity and longer term funds in the market”.
Apart from ‘crashing’ interest rate on mortgage loans, NMRC is also expected to deliver about 750,000 homes annually, which can only mean that home ownership level would increase with the multiplier effect of creating jobs and increasing national productivity, which would translate to increase in Gross Domestic Product (GDP) that will ensure greater well being for the people and improved standard of living, all leading to economic growth.
For the operators, expectation is even higher, as the new Nigerian Mortgage Refinance Company (NMRC) will in the same month, commence refinancing mortgages to be originated by the successful PMBs, leading to more liquidity and a robust mortgage industry in the country.
BusinessDay had exclusively reported that out of about 83 PMBs, only 40 were able to meet the minimum recapitalisation conditions handed down by the CBN as at December 31, 2013 deadline.
Of this number, seven met the N5 billion capital requirement to operate as national mortgage banks, while 33 qualified for operation at the state level, having met the N2.5 billion expected capital to function in that capacity.
Corroborating this report in a telephone interview with our correspondent recently, Femi Johnson, president of the Mortgage Banking Association of Nigeria (MBAN) disclosed that the CBN had already written to the 40 successful PMBs, adding that about eight others have had to downscale, to operate as micro finance banks.
Our earlier report quotes CBN sources as saying that the recapitalisation exercise had gone on successfully, pointing out that what seemed a little delay in announcing the successful PMBs was deliberate, to allow a couple of PMBs which have real estate development subsidiaries, to divest from those subsidiaries, so that the announcement would be seamless and final.
The first quarter of this year witnessed what analysts described as a revolution in Nigeria’s mortgage industry, as the period saw the coming on stream of the Federal Government mid-wifed but private sector-led NMRC and the pace-setting Lagos State Homeownership Mortgage Scheme (LagosHOMS) on January 16, and February 3 respectively.
These were preceded a month earlier by the completion of the recapitalisation of the PMBs that has produced 33 PMBs which would operate at the state level, and seven others that would operate at the national level with N2.5 billion and N5 billion minimum capital base respectively.
“The anxiety on the June deadline is not misplaced because we have antecedents in this country; the Federal Mortgage Bank of Nigeria (FMBN) has operated for decades in this country, along with the National Housing Fund (NHF) without any impact on homeownership or housing delivery”, Oluyemi Madamidola, a mortgage expert, told BusinessDay in Lagos.
Continuing, he said, “as a country, we are not in lack of good ideas; what we lack instead is the will to implement the ideas. The launching of the NMRC and the recapitalisation of the PMBs happening almost the same time, is a brilliant idea, but how this plays out to our benefit is another kettle of fish”.
The high expectation among prospective homeowners is premised on the assurance by the Federal Government that NMRC would pull down lending rates for housing from the current spread of 20 to 23 percent to the low double digits or, at least, to a high single digit.
Ngozi Okonjo Iweala, the minister of finance, said at the launching of the company in Abuja that “this company is being set up to help lower the funding cost of mortgages and promote affordability and availability of good housing to working Nigerians by providing mortgage lending banks increased access to liquidity and longer term funds in the market”.
Apart from ‘crashing’ interest rate on mortgage loans, NMRC is also expected to deliver about 750,000 homes annually, which can only mean that home ownership level would increase with the multiplier effect of creating jobs and increasing national productivity, which would translate to increase in Gross Domestic Product (GDP) that will ensure greater well being for the people and improved standard of living, all leading to economic growth.
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